Iraq eyes 4th mobile license auction

Iraq hopes to auction a fourth mobile phone operator license for around $2 billion by the end of the year and will spend $500 million on upgrading battered infrastructure, the communications minister said on Wednesday.

Mohammed Allawi, who took over the communications portfolio toward the end of last year, said Iraq aimed to boost fixed-line phone penetration and internet reach to 25 percent within five years. What we have decided about the fourth license is to divide it into three main shares, Allawi said in his first interview with foreign media.Forty percent of the shares (will go) to the operator, 35 percent of the shares to the public, and 25 percent of the shares to the ministry. Iraq needs billions of dollars of foreign investment as it struggles to rebuild dilapidated infrastructure after decades of war and economic sanctions.The mobile phone market, which did not exist in Iraq under Saddam Hussein, has boomed since the 2003 US-led invasion that toppled him, although its fixed-line network remains badly damaged. Iraq held an auction in 2007 in which Kuwait`s Zain, AsiaCell and Korek, which is based in the northern Kurdish region, bought 15-year licenses for $1.25 billion each.

Allawi said he expected the fourth mobile phone license to go for $2 billion at an auction. The license would be approved and issued by Iraq`s Communications and Media Commission.

He also said Iraq had allocated $500 million to spend on the telecoms industry this year, which included 37 percent of last year`s unspent budget allocation. The minister said while network jamming by security forces was partly to blame for patchy mobile coverage, the operators` infrastructure had been unable to cope with growing demand.

Allawi said completing an extensive fiber optic infrastructure network to connect Iraq to the rest of the world would be one of his main aims for this year. The plan includes the installation of three fiber optic cable connections between Iraq and Iran, two each with Turkey, Jordan and Saudi Arabia, as well as links with Syria and Kuwait by the end of the year.I believe by the end of this year the infrastructure is going to be there. All the foreign companies, once they want to come into Iraq, they will find that the required infrastructure is there, he said. Iraq currently has 1.2 million landlines, of which 800,000 are in working order. The Communications Ministry aims to increase this to 10 million landlines within five years, which would give it a 25 percent penetration rate, the minister said.The cost of the project is more than $3 billion, he said, adding that the ministry and Japan had allocated $600 million each to the project. The rest would be financed by the private sector.

Internet penetration, which currently sits at 3 percent, would rise to 25 percent once the 10 million landlines mark had been reached, Allawi said. The ministry is also focusing on rooting out corruption, which remained a big concern and a deterrent to foreign firms seeking to invest in Iraq.In case of proven bribery by any company, the ministry has the right to cancel the agreement and impose high penalties not less than 20 percent of the cost of the contract on these companies, Allawi said.

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